Government Debt Management: New Trends and Challenges

Transcription

1 The independent world forum for central bankers and financial supervisors Training course/seminar series 2011 Government Debt Management: New Trends and Challenges 4-day intensive residential programme September 2011 Christ s College, Cambridge Course Chairman: Thordur Jonasson Former CEO Icelandic Debt Management Office Series adviser: Charles Goodhart, CBE Professor Emeritus London School of Economics Financial Markets Group Hosted by Central Banking Publications

2 Dear Delegate, In , what was a financial crisis became a sovereign crisis. A sharp increase in market uncertainty surrounding sovereigns impacted spreads, ratings and issuance. More tellingly, several governments lost their reputations as reliable debtors. The increased concern over sovereign risk has dominated media discourse and industry discussion. As you and your team know only too well, the shifts represent a secular change that will impact issuance for decades to come. For debt managers, this increased pressure presents a series of technical challenges as investors become more discerning and markets less forgiving. As they look to differentiate themselves in competitive markets, debt managers are increasingly considering new techniques, new types of debt, new sources of funding and new approaches to risk management, portfolio analysis and strategic transparency. This seminar has been designed to equip debt managers with the requisite tools to meet these testing challenges. Sessions illustrate the key practical lessons for debt managers at a time of heightened attention on their performance, demonstrating where they can add value and contribute to underpinning economic recovery. The closed roundtable format allows an international group of delegates maximum opportunities to benchmark their work against good practice internationally and to exchange views with their peers in an informal and confidential setting. Throughout, the emphasis is on how specific national situations require tailored solutions and how these lessons can be applied to delegates day-to-day operations. This year the expert panel of speakers includes: Jean-Luc Steylaers, Former Deputy Director, Belgian Debt Management Agency Lars Mayland Nielsen, Senior Advisor, Government Debt Management, National Bank of Denmark Mike Williams, Former Chief Executive, UK Debt Management Office Arindam Roy, Head of Debt Management Section, Commonwealth Secretariat Rafael Molina and Spencer Jones, Newstate Partners Elisabetta Vangelista, Senior Markets Researcher, UK Debt Management Office This format, as more than 3,000 central bankers, debt managers and supervisors can attest, encourages delegates to quiz panelists, raise issues and discuss solutions to the specific challenges they face. We are delighted to welcome Thordur Jonasson, a vastly experienced practitioner in sovereign debt management, as course chairman this year. We look forward to welcoming you to Cambridge on September 13th. Yours sincerely, Robert Pringle Chairman Central Banking Publications Good selection of participants -- all high level of professionals -- very important for dialogue and exchange of experiences A central bank delegate

3 Tuesday 13 September Approaches to post-crisis debt management Government Debt Management: New Trends and Challenges Autumn 2011 Introductory session by the Chairman Course chairman Thordur Jonasson, Former CEO Icelandic Debt Management Office In this introductory session, the chairman will lay the foundations for the course by identifying the numerous challenges facing government debt managers in the post-crisis markets. Participants will be asked to contribute by outlining the main obstacles their organisation is facing and the priorities which they have set to negotiate them. Understanding pressures of the post-crisis environment Rafael Molina and Spencer Jones, Managing Partners, Newstate Partners Consistent heavy borrowing has been encouraged by concerns over the pace of the economic recovery and the growing focus on sovereign risks, particularly in the Eurozone. As projections from the OECD Sovereign Borrowing Outlook expect global government debt ratios to further deteriorate, the need to secure funding at a low cost and with adequately low levels of financial risk has rarely been greater. This session, led by two industry experts, who boast considerable experience of advising governments and central banks on how to optimise their debt management strategies, will consider how these challenges can be understood in the context of the post-crisis economy and how best to adapt to the ongoing pressures in the government debt and securities markets. Governance and independence Jean-Luc Steylaers, Former Deputy Director, Investor Relations & Product Development, Belgian Debt Management Agency This session will assess the position of the debt management function within the apparatus of public financial administration. Recent times have seen many autonomous DMOs created, whilst several remain within the central bank infrastructure or as part of the ministry of finance. The speaker will evaluate how the location of the debt and cash management functions affect the DMO s mandated responsibilities and under what circumstances it is desirous to establish a separate entity. Discussion will focus on the emerging governance issues at a time of extraordinary monetary policy operations and strained government finances. About the course chairman Thordur Jonasson joined the then newly established Debt Management Office in Iceland in First he served as Chief Accountant, then as Assistant Director and finally CEO. During his time with the DMO he contributed to the development of the domestic debt markets by undertaking reforms that reshaped the debt management function, the primary market, the secondary market, the investor base and the settlement infrastructure. Since 2007 he has worked as an international consultant in public debt management and debt market development. He has worked on assignments in Africa, the Caribbean, Eastern Europe, Latin America and Central and South Asia.

4 Wednesday 14 September New issuance tools and strategies Major changes in debt management marketing Thordur Jonasson, Course Chairman Markets are continuing to experience volatility as sovereign downgrades, unsustainable deficits and widening credit spreads breed uncertainty amongst investors. The need to raise extra funds under such circumstances has increased the emphasis on debt managers to diversify their portfolio of investors and to rely on increased syndication to improve transparency and save costs. In this session, the chairman will outline the latest changes to market operations that debt managers are undertaking to address the pressures posed by post-crisis economic conditions. Issuance choices, techniques and their objectives Lars Mayland Nielsen, Senior Advisor, Government Debt Management, National Bank of Denmark The fallout from the financial crisis, record bond issuance, investor risk aversion, and a flight to quality assets, has led to a perfect storm of competition for debt management offices. The speaker, a senior advisor on debt management policy from the Central Bank of Denmark, will discuss how debt managers can actively differentiate their debt issuance by introducing new techniques or by conditioning existing systems. The group will be asked to evaluate the merits of such techniques and to consider how the conditions of the issuing government and the intended investors might influence such strategies. Developing and maintaining liquidity in domestic debt markets Thordur Jonasson, Course Chairman Poor market infrastructure has resulted in some issuers being hampered by a lack of liquidity and, as a result, suffering increased issuance costs and difficulties in attracting foreign investment in local currency bonds. In this session, the chairman, who has advised the World Bank on a project to tackle these issues, will outline steps that can be taken to establish a framework for effective liquidity management in local markets. Discussion will cover how these concerns can be tackled in practice, and how the barriers to their implementation can be overcome. Improving investor relations: the case for transparency Christopher Marks, Head of Debt and Capital Markets EMEA, BNP Paribas (Invited) Successful debt management is based on the confidence of investors. Confidence has been understandably shaken by the crisis and by growing concerns surrounding sovereign risks. In light of these economic conditions, DMOs must be careful to maintain a clearly communicated and transparent issuance programme so as not to exacerbate existing problems by becoming too unpredictable. Whilst auction frequency and flexibility undoubtedly minimise costs, transparency and a clearly defined strategy will minimise uncertainty and ensure that debt managers do not incur unnecessary borrowing costs by damaging confidence. In this session, the speaker will outline a framework for communicating a transparent and articulate debt management programme and explain the importance of maintaining market communications with both primary and secondary agents. Group Workshop: attracting foreign investors Thordur Jonasson, Course Chairman In this session, the chairman will invite the group to compare the strategies in place within their jurisdictions to attract foreign investors, including approaches to communications and road shows. The group will be encouraged to compare their experiences, discuss what they believe can be done to improve these procedures and to share their experiences with major primary dealers.

5 Thursday 15 September Managing the debt office Government Debt Management: New Trends and Challenges Autumn 2011 Building a middle office function: portfolio analysis Emile Spijkerman, Acting Head of Policy and Risk Management, Dutch State Treasury Agency (Invited) The analytical functions of a middle office, if robustly established, facilitate a government s ability to meet its debt servicing obligations and to maintain its funding needs at minimal cost and with acceptable financial risks. This is done through a diligent analysis of front office activity which ensures that strategy is carried out in compliance with risk and cost boundaries. In short, the middle office ensures that debt strategies are adhered to. In this session, the speaker will discuss how the middle office can be set up to provide accurate information on debt servicing and interest incomes, provide recommendations on debt restructuring and run frequent and efficient risk and portfolio analysis. Discussion will also focus on how this information can be used to support the front office and how the two functions can coordinate effectively. Cash management and its role in debt management Mike Williams, Former Chief Executive, UK Debt Management Office An increasing number of debt management offices are being handed responsibility for managing the Treasury s cash. Information on how this is efficiently handled remains scarce and many institutions lack experience in undertaking such responsibilities. The speaker will offer solutions on how to rise to these challenges and will introduce the benefits of being able to cost effectively combine the debt and cash management operations. Discussion will focus on how these benefits can be realised in practice and the resulting policy implications. Furthermore, the speaker will explain how effective cash management can support the DMOs primary function whilst also benefitting related monetary and fiscal policies. Operational risk and debt management Malin Bernsten, Riksgalden Operational Risk Manager, Swedish National Debt Office Operational risks coming to light can result in significant political and reputational damages. The Debt Management Performance Assessment conducted by the World Bank in 2010 found that several of the nations who took part had either non-existent or grossly underdeveloped operational risk practices. Unlike other forms of well established risk undertaken by the debt management office, operational risk is by nature difficult to capture and measure, and there is widespread uncertainty about how it can be managed effectively. As operational risk is linked with the business as a whole, it also covers a far wider scope than risk silos that focus on credit or market liquidity. In this session, the speaker will discuss how operational risk is managed within their debt management office, offering practical examples of how operational risks are identified, captured and mitigated daily. Great programme and wonderful networking opportunity. Brian Luvuyo Hoga, South African Reserve Bank Standing ovation for the idea of the conference, its venue and organisation. A central bank delegate

6 Friday 16 September Risk management and IT infrastructure Analytical tools for effective debt management Arindam Roy, Head of Debt Management Section, Commonwealth Secretariat Public debt managers are expected to process and report a high number of complex and wide ranging financial transactions. It is important for debt strategy, forecasting and performance analysis that this information is efficiently stored, regularly updated and readily available. This presents a significant challenge in terms of back office IT infrastructure. In this session, the speaker will discuss these issues and ways in which DMOs can strengthen the institutional framework of debt management. Risk management and the role of market intelligence: examples from the UK experience Elisabetta Vangelista, Senior Markets Researcher, UK Debt Management Office One of the major quandaries facing debt managers is how the requirement to raise funds at low cost can be achieved without generating potentially dangerous levels of rollover risk. In this session, the speaker will discuss risk management in public debt management, its objectives and how the UK Debt Management Office organises its risk management function. Particular focus will be on how focused market research can contribute significantly to the risk management function. Course lessons and roundtable Thordur Jonasson, Course Chairman To conclude the course, the chairman will review the sessions that have taken place, inviting the group to share what they believe they have learnt from the sessions and to suggest how these lessons will improve their future approach and inform their role at their home institution moving forward. CBP training course/seminar series, Autumn 2011: How to Regulate Islamic Financial Markets and Products Communications and External Relations for Central Banks Effective Oversight of Financial Market Infrastructures The Changing Framework of Monetary Policy Operations Legal Risks and Good Governance for Central Banks Human Resources: Engaging People and Facilitating Performance Risk Management for Central Banks New Challenges in Financial Market Supervision & Regulation Financial Independence and Accountability for Central Banks Maximising the Value of Economic Analysis and Forecasting for Central Banks IT Governance for Central Banks For detailed programmes and a fax-back registration form for each of these key courses, please visit:

7 Booking details Course fee: 2,700 (VAT at 0% for delegates employed by government in furtherance of its sovereign activities) 4-day (3 nights) residential course Course fee includes: en-suite accommodation, meals, refreshments, course documentation and a complimentary copy of the most recent issue of the Central Banking journal. Substitute delegates can be accepted should the registered delegate be unable to attend; please let us know prior to the event. How to book Please complete and return the registration form overleaf to: Central Banking Publications Ltd. Incisive Media Haymarket House Haymarket London SW1Y 4RX UK telephone: +44 (0) fax: +44 (0) [email protected] website: The venue Christ s College is one of England s oldest university colleges and traces its origins back to 1439 when it was founded by William Byngham as God s house and adopted by King Henry VI. The college is conveniently situated in the heart of Cambridge surrounded by all the historical sites, and is one hour by train from London. About Central Banking Publications Central Banking Publications events division is the leading independent organiser of public policy seminars/training courses for the official sector. Since 1997, CBP has hosted roundtable seminars and training courses for over 3,000 senior policymakers from central banks, ministries of finance and financial regulatory agencies around the world. Senior officials from more than 120 countries have attended these meetings over the past ten years.

8 Registration for Government Debt Management: New Trends and Challenges 1. Delegate details: PLEASE WRITE IN CAPITALS Mr/Mrs/Ms: First name: Job title: Organisation: Address: Telephone: Facsimile: 1: 2: Surname/Family name: Postcode: Please provide us with the direct address of the delegate and an additional address if possible. This is very important because all correspondence with delegates is by . Course fee: 2,700 (VAT at 0% for delegates employed by government in furtherance of its sovereign activities) 2. Payment details: Bank transfer: The Royal Bank of Scotland, 62/63 Threadneedle Street, London EC2R 8LA, UK A/c No: Sort code: IBAN: GB89 RBOS Swift code: RBOSGB2L Please pay the course fee net of all bank charges and send us the copy of the transfer details Credit card: please charge to my Visa Mastercard American Express Card No: Cardholder name: Cardholder address (if different from above): Security Code: Expiry date: Signature: Cheque: I enclose a cheque for Date: payable to Incisive Financial Publishing Ltd. I will require accommodation from I have read and agree to the terms and conditions below. to Signature: Date: Terms & Conditions: A refund (less 10% administration fee) will be made if notice of cancellation is received in writing three weeks before the event. We regret that no refunds can be given after this period. A substitute delegate is always welcome at no extra charge. The programme may change due to unforeseen circumstances, and Incisive Media reserves the right to alter the venue and/or speakers. Incisive Media accepts no responsibility for any loss or damage to property belonging to, nor for any personal injury incurred by, attendees at our conferences, whether within the conference venue or otherwise. Data Protection: By registering for a Central Banking training course you will receive further information relating to this event. In addition we will send you information about our other relevant products and services which we believe will be of interest to you. If you do not wish to receive other relevant information from Incisive Media via a particular medium please click the following relevant boxes: mail phone fax . Incisive Media will also allow carefully selected third parties to contact you about their products and services. If you do not wish to receive information from third parties via any of the following media please tick the relevant boxes: mail phone. Please tick if you are happy to receive relevant information from carefully selected third parties by and fax. Registered Office Haymarket House, Haymarket, London, SW1Y 4RX UK. Registered in England and Wales number VAT No. GB P.